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UK economy shrank in April after Brexit car plant shutdowns

The UK economy shrank by 0.4% in April, after a “dramatic fall” in car manufacturing, the Office for National Statistics said.

A number of car plants owned by the likes of Jaguar Land Rover and Honda temporarily halted production in April, to mitigate any disruption to their supply chains as Britain prepared to leave the European Union.

JLR shut down all three UK manufacturing plants and its engineering plant between 8-12 April, for the second time in six months.

Last July the company warned that its UK plants and at least 40,000 jobs are at risk if the country leaves the European Union without a free trade deal.

Honda stopped production for six days in the same month, and plans to shut its Swindon plant altogether by 2022, with 3,500 UK jobs at stake.

The ONS’ assessment comes soon after the Society of Motor Manufacturers and Traders (SMMT), released “dismal” figures showing the number of cars built in the UK fell by almost half in April, compared with a year ago – the industry’s 1th consecutive month of decline.

Rob Kent-Smith, the ONS head of GDP said: “GDP growth showed some weakening across the latest 3 months with the economy shrinking in the month of April mainly due to a dramatic fall in car production with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.

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“There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded.”

The UK 0.4% contraction in April compares to a 0.1% decline in gross domestic product (GDP) in March.

Over the three months to April, GDP was up 0.3% compared to the 0.5% rise in the first quarter, the ONS said.

The pound dipped 0.3% to $ 1.269 and fell 0.08% against the Euro at €1.123 after figures were released.

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